(News Bulletin 247) – The specialist in seamless tubes for the oil and gas industry announced that it had achieved its objective of reducing net debt to zero one year in advance. Its shares climb on the Paris Stock Exchange.

A successful bet for Vallourec. The specialist in seamless tubes for the oil and gas industry reserved a pleasant surprise in terms of its balance sheet this Wednesday, January 8. The group announced that it had achieved its objective of zero net debt, one year ahead of its initial plan.

Based on preliminary estimates, Vallourec indicated that it had reduced its net debt by just over 240 million euros in the fourth quarter of 2024. The group thus marks its ninth consecutive quarter of debt reduction.

Vallourec explains in today’s press release that it received the sum of 155 million euros over the period, coming from the sale of the majority of its Düsseldorf-Rath site in Germany. The group adds that it was less intensive in investment expenditure, while working capital requirements were lower than previously announced by the company.

“The real news from today’s announcement concerns the generation of free cash flow for the fourth quarter, which clearly exceeded the group’s expectations by 85 million euros, “management was initially cautious about free cash flow due to an unfavorable pace of capex (investments) expenses, restructuring charges and financial charges”, notes TP ICAP Midcap. The company initially planned to completely deleverage by the end of 2025, at the latest.

“I am extremely pleased that we have achieved our net zero debt target one year ahead of our initial deleveraging plan. Since the third quarter of 2022, we have reduced our net debt by more than €1.5 billion , fully refinanced our debt and our credit facilities, and announced the end of our safeguard plan”, rejoiced Philippe Guillemot, Chairman of the Board of Directors and CEO of Vallourec.

On the Paris Stock Exchange, investors applaud the efforts of Vallourec, the title of the specialist in seamless tubes jumped 6.10% to 18.055 euros, occupying the head of the SBF 120 this Wednesday around 2:30 p.m.

A (highly anticipated) return of the dividend

Vallourec took advantage of this announcement to provide an update on its 2024 financial results. Based on estimated and therefore unaudited figures, gross operating income for the 2024 financial year should be in the range of 800 to 850 million dinars. euros, in line with the company’s projections communicated during its third quarter results.

The company confirms that 80% to 100% of cash flow generated in the second half of 2024 will be eligible for return to shareholders. The industrial group having reduced its debt to zero, it can now return cash to its holders. This was also the sine qua non condition for the payment of a dividend, Vallourec warned in September 2023 during a day dedicated to investors.

Relieved of its debt, the company can finally reward its shareholders, which has not paid a dividend since 2015 for the 2014 financial year.

What about Arcelormittal’s intentions?

The company has come a long way. The specialist in seamless tubes for the oil and gas industry has experienced difficult years which led it to carry out several financial restructurings. Including the last one in 2021, which led to funds managed by Apollo becoming the controlling shareholder of the group. These funds then sold this 28.4% stake to steelmaker Arcelormittal in March 2024.

With Vallourec’s recovery now more than on track, the market will be led to wonder about a possible takeover bid for Arcelormittal, especially as the February 6 deadline is fast approaching. On this date, the steelmaker’s commitment not to launch a public offer or take control of the company will end.